Keep Rehab Humming

February 26, 1985

As if the long gray winter weren`t bleak enough, now comes a long gray report from the state noting that Chicago lost almost 120,000 jobs between 1979 and mid-1983. It`s likely that some of them were reclaimed as the economic recovery filtered into this area, but not even the most wildly optimistic civic booster would pretend that city employment is back where it was five or six years ago.

But there is some bright economic news in Chicago. In the 18 months that ended Dec. 31, about 5,300 residential units were constructed or restored, apparently exceeding (by about 300) the number torn down. And, apparently, this is the first time in 15 years that the city`s supply of sound housing has grown.

The ``apparentlys`` are necessary because different city administrations have had different ways of reporting the numbers. But 2,400 apartments in Presidential Towers west of the Loop are nearing completion and another 2,850 new or rehabilitated units are in the pipeline, including the first stage of the River City complex; so, by the end of this year, there should be no doubt about the net gain.

One reason is a more efficient, service-oriented city housing department under Commissioner Brenda Gaines. Another is the willingness of financial institutions to invest in areas once considered too risky. Three banks

--Harris, Northern Trust and First Chicago--are pooling $173 million over five years to improve neighborhood housing and businesses. Community Investment Corp., a nonprofit agency backed by local financial companies, has loaned $21 million in the last year for rehabilitating 1,500 units. Standard Oil Co. (Indiana) and the Amoco Foundation helped bankroll a $20 million rehab project.

Thanks to an adroit use of city, state and federal aid, this new money has been offered at below-market interest rates. But all three of those government sources could shrink as Congress searches for ways to cut the deficit. Steps should be taken now to find alternate incentives and, in particular, to stretch that rehab money.

First, the city should revise its housing code, kept rigid and complicated at the insistence of trade unions. It bans cheaper, easier-to-install materials used safely just about everywhere in the country except Chicago.

The Cook County Board should delay property tax increases resulting from improvements to older housing, an incentive that other areas have used for years to encourage rehab.

The state should appropriate money--possibly through Gov. Thompson`s

``Build Illinois`` program--for the mortgage insurance corporation created last year by the legislature but still unfunded. Lending institutions consider this protection essential to many of their neighborhood projects.

Finally, Congress should kill the Davis-Bacon Act, which mandates high

``prevailing`` wages for workers on any project that has any form of federal assistance, direct or indirect. Everything built or rehabbed with Chicago`s new loan pools is affected. If the federal government is going to slash housing aid, it should also throw out this outrageous, outmoded special- interest legislation that drives up housing costs around the country.